ASE Technology Holding Co., Ltd. (ASX) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates optimism with growth in ATM revenue and gross margins, supported by strong demand and strategic acquisitions like EugenLight. The Q&A section further supports this sentiment with increased LEAP revenue guidance and strategic realignment in the EMS business towards AI opportunities. However, some caution is noted due to management's avoidance of specific long-term guidance and EMS growth timelines. Overall, the positive growth outlook and strategic initiatives suggest a positive stock price movement.
Key Financial Performance
Consolidated Revenue Grew 12% year-over-year in 2025, driven by ATM revenue up 23% led by Leading Edge Advanced Packaging services and Testing business.
LEAP Services Revenue Reached $1.6 billion in 2025, accounting for 13% of ATM revenue, up from $0.6 billion in 2024 or 6% of ATM revenue. Growth driven by demand for advanced packaging and testing.
Testing Business Revenue Grew 36% year-over-year in 2025, supported by expanding turnkey and leading-edge test.
Machinery CapEx Totaled $3.4 billion in 2025, driven by investments in LEAP services and testing.
Building Facilities Automation CapEx Totaled $2.1 billion in 2025, mainly driven by LEAP services and testing investment.
Fourth Quarter Consolidated Net Revenues $177.9 billion, representing an increase of 10% year-over-year. Growth attributed to higher ATM factory utilization and NT dollar depreciation.
Fourth Quarter Gross Profit $34.7 billion with a gross margin of 19.5%, improved by 3.1 percentage points year-over-year due to higher factory utilization and NT dollar depreciation.
Fourth Quarter Operating Profit $17.7 billion, up $6.5 billion year-over-year. Operating margin was 9.9%, up 3 percentage points year-over-year, driven by higher ATM business loading.
Fourth Quarter Net Income $14.7 billion, representing an increase of $5.4 billion year-over-year, supported by higher operating leverage and NT dollar depreciation.
2025 Full Year Consolidated Net Revenues Improved 8% year-over-year. ATM business improved by 20%, while EMS business declined by 5% annually. Growth driven by higher ATM revenue mix and factory utilization.
2025 Full Year Gross Profit $114.2 billion, improving $17.3 billion year-over-year or by 18%. Gross margin improved 1.4 percentage points to 17.7%, driven by higher ATM revenue mix and factory utilization.
2025 Full Year Operating Profit $50.8 billion, increasing $11.6 billion year-over-year. Operating margin was 7.9%, representing an improvement of 1.3 percentage points from 2024, driven by ATM business growth.
2025 Full Year Net Income Increased by 25% to $40.7 billion, supported by higher ATM revenue and operating leverage.
ATM Business Revenue (Fourth Quarter) $109.7 billion, up 24% year-over-year. Growth driven by higher equipment utilization and LEAP services.
ATM Business Gross Profit (Fourth Quarter) $28.8 billion, up $8.2 billion year-over-year. Gross margin was 26.3%, up 3 percentage points year-over-year, driven by higher equipment utilization and NT dollar depreciation.
ATM Business Operating Profit (Fourth Quarter) $16.1 billion, representing an annual increase of $6.6 billion. Operating margin was 14.7%, up 4 percentage points year-over-year, driven by higher revenues and efficiency.
ATM Business Full Year Revenue Improved by 19% in 2025, with packaging business up 17% and test business up 32%. Growth driven by LEAP services and recovery of traditional services.
ATM Business Full Year Gross Profit Improved 25% to $91.4 billion in 2025. Gross margin was 23.5%, up 1 percentage point from 2024, driven by higher factory efficiency and LEAP services.
ATM Business Full Year Operating Profit Improved $12.1 billion to $44.1 billion in 2025. Operating margin improved 1.5 percentage points to 11.3%, driven by higher revenues and efficiency.
EMS Business Full Year Revenue Declined 5% in 2025, attributed to differing underlying device seasonality.
EMS Business Full Year Gross Profit Declined 3% in 2025, with gross margin improving 0.1 percentage points to 9.1%, driven by product mix.
EMS Business Full Year Operating Profit Declined 5% in 2025, with operating margin staying flat at 2.9%.
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Operating Highlights
AI server cycle: Continues to grow, driven by hyperscaler and data center development. Robotics, drones, automotive, and smart manufacturing are expected to show volume growth in the next 2 years.
LEAP services: Revenue reached $1.6 billion in 2025, up from $0.6 billion in 2024, accounting for 13% of ATM revenue. Expected to double to $3.2 billion in 2026.
Testing business: Grew 36% year-on-year in 2025, supported by expanding turnkey and leading-edge test services.
Taiwan Plus One strategy: ASE is expanding its footprint outside Taiwan, focusing on Penang for automotive and robotics, and also building in Korea and the Philippines to capture non-Taiwan wafer opportunities.
Taiwan cluster leadership: ASE and Taiwan maintain leadership in semiconductor manufacturing, leveraging cross-collaboration and co-optimization to address supply constraints and fast technology evolution.
CapEx investments: Machinery CapEx totaled $3.4 billion and building facilities automation CapEx was $2.1 billion in 2025. Additional $1.5 billion in machinery CapEx planned for 2026.
Factory utilization: ATM factories in Taiwan ran at or near full capacity, with overall ATM utilization at 80% in Q4 2025.
Focus on AI and advanced technologies: ASE is prioritizing AI proliferation, automotive, and industrial sector recovery, with investments in R&D, human capital, and smart factory infrastructure.
Global manufacturing footprint: ASE is deploying resources globally to support next-generation opportunities, particularly in Penang, Korea, and the Philippines.
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Risk or Challenges
Supply Chain Constraints: There are constraints in substrate and memory, which could impact manufacturing for partners.
Resource Management Challenges: Managing factory space, CapEx, and resources amidst rapid growth and ramp-up is a difficult task.
Economic and Currency Risks: Appreciation of the NT dollar negatively impacted margins, and foreign exchange fluctuations remain a concern.
Seasonality in EMS Business: The EMS business slowed due to product seasonality, impacting revenue and profitability.
Labor Costs and Efficiency: Higher labor costs, especially during Lunar New Year holidays, are expected to impact margins.
CapEx and Investment Risks: Aggressive CapEx spending to support growth could strain financial resources if returns are delayed or lower than expected.
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Guidance & Outlook
AI server cycle and market trends: The AI server cycle is expected to continue, driven by hyperscaler and data center development. Growth in edge applications, robotics, drones, automotive, and smart manufacturing is anticipated over the next two years. Mainstream business recovery, including IoT and automotive sectors, is expected to improve in 2026 compared to 2025.
Taiwan semiconductor manufacturing leadership: Taiwan is projected to maintain its leadership in semiconductor manufacturing for the next several years, with ASE leveraging its position to optimize systems, including chip-level and packaging-level advancements.
Taiwan Plus One strategy: ASE plans to expand its manufacturing footprint outside Taiwan, particularly in Penang, Korea, and the Philippines, to support global customer requirements. Penang will focus on automotive and robotics sectors.
2026 revenue and growth outlook: Revenue growth is expected to continue in 2026, driven by leading-edge solutions and broad-based semiconductor demand related to AI proliferation and general market recovery. ATM business revenue is projected to double from USD 1.6 billion to USD 3.2 billion, with 75% from packaging and 25% from testing.
CapEx and infrastructure investment: ASE plans to increase CapEx spending in 2026, adding USD 1.5 billion in machinery and maintaining USD 2.1 billion in building and facilities investment. Investments will focus on R&D, human capital, advanced capacity, and smart factory infrastructure to support multi-year growth.
Profitability and margin expectations: ATM gross margins are expected to remain within the structural margin range throughout 2026, improving each quarter, with the second half reaching the upper end of the range. Favorable pricing, operating leverage, and automation are expected to enhance mid- to long-term profitability.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide a breakdown of your LEAP business revenue for this year?
A:The LEAP revenue is expected to double to $3.2 billion this year. The breakdown includes OS and wafer sort on the test side as the primary contributors. Full process revenue is expected to triple and contribute about 10% of the overall LEAP service revenue. Final tests will also contribute roughly 10% of the test business revenue by the later part of the year.
Q:How should we think about the long-term gross margin trends for LEAP and overall IC ATM?
A:Management avoided providing long-term guidance, stating they prefer to take it one year at a time. They did not provide specific details on how high gross margins could go in the next 2-3 years.
Q:What is the outlook for your mainstream business this year, including shipment and pricing?
A:The mainstream business is expected to grow at a similar pace as last year, supported by sectors like IoT, automotive, and industrial. The pricing environment is described as friendly, but no specific details on pricing increases were provided. Management avoided commenting on customer-specific pricing information.
Q:Why has the LEAP business revenue guidance increased from $1.6 billion to $3.2 billion?
A:The increase is due to better visibility of factory space and strong demand exceeding capacity. Management emphasized the complexity of scaling up, including quality, delivery, and resource planning challenges.
Q:What does the acquisition of EugenLight mean for ASE's CPO business?
A:The acquisition is part of ASE's strategy to position itself in the optical technology space, including silicon photonics and CPO. ASE aims to manage silicon, CPO, and packaging to support system-level optimization for customers.
Q:What is ASE's role in solving technical challenges in the CPO supply chain?
A:ASE is involved in managing complex configurations at the packaging level, including chip-to-chip, chip-to-packaging, and chip-to-rack. They collaborate with foundry partners and customers to address these challenges.
Q:What is the strategy for your EMS business, and why has it been muted in recent years?
A:The EMS business is being realigned to focus on AI-related opportunities and system-level optimization. While consumer business has reached a comfortable level, ASE is shifting resources to align with market changes and customer requirements.
Q:How long will the transition in the EMS business take before it catches up with ATM growth?
A:Management expects EMS to grow this year but did not provide a specific timeline for when it will catch up with ATM growth.
Q:What are your plans for full process packaging, and how does it align with partners' plans?
A:Full process packaging is expected to contribute 10% of LEAP revenue this year. ASE collaborates with foundry partners and customers to provide alternative configurations and toolboxes for diverse applications. Management emphasized the importance of partnership and co-optimization.
Q:What is the outlook for mainstream demand, especially with fluctuations in smartphone-related demand?
A:Mainstream demand is expected to grow, supported by industrial and automotive recovery and additional loading from AI data centers. Management acknowledged fluctuations in smartphone demand but emphasized overall growth in the general sector.
Q:What are ASE's plans for various advanced packaging types, including panel-based and chip-on-wafer-on-PCB?
A:ASE is preparing for both larger and smaller chip configurations. They plan to have a fully automated 310x310 panel in production by the end of the year and are exploring larger panel sizes based on technology and volume requirements.
Q:Can overall ATM gross margin reach 30% or higher this year?
A:Gross margin is expected to improve sequentially each quarter, reaching the upper end of the structural range by the second half of the year. Management did not confirm if it would exceed 30%.
Q:Is advanced packaging, like 2.5D and 3D, a new area for ASE?
A:No, ASE has been involved in advanced packaging for some time. They are also buying factories with clean rooms to support this business.
Q:Is photonics a new area for ASE, and what is the outlook for this market?
A:Photonics represents a paradigm shift, and ASE is developing toolboxes to support various architectural requirements. They aim to provide solutions for electronic and optical signals across different cost and performance levels.
Q:What is your view on capital intensity and balancing capacity growth with customer demand?
A:Management did not provide a long-term guideline for capital intensity. They emphasized taking a disciplined approach to CapEx while responding to strong demand in the AI space.
Q:What is the return on investment for CapEx in advanced nodes versus traditional business?
A:Management stated that CapEx should at least cover depreciation and that leading-edge services are margin and return accretive. They are seeing improvements in ROE and ROIC but did not provide specific metrics.
Q:Is there a structural price hike in the ATM industry?
A:Management stated that pricing strategies depend on the situation and customer requirements. They did not confirm a structural price hike and emphasized that technology and product mix drive structural margins.
Q:What are ASE's plans for clean room and factory space?
A:ASE is investing in building and acquiring factory space, including clean rooms, to support growth. They are exploring options across Taiwan and collaborating with partners to secure suitable locations.
Q:Review of Unclear Management Responses
A:Management avoided providing long-term guidance on gross margin trends for LEAP and overall IC ATM, stating they prefer to take it one year at a time. They also avoided commenting on customer-specific pricing information and did not provide a specific timeline for when the EMS business will catch up with ATM growth.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
ASE Taiwan
ASE perspective
ATM EMS
Dr
EMS ATM
NT dollar
PPA
Page ATM
Penang
RD
Taiwan ASE
Taiwan cluster
basis
capital
depreciation
efficiency
evolution
expenditure
expense percentage
factory
footprint
gain
improvement
mainstream
margin percentage
optimization
percentage point
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point percentage
result
revenue ATM
sector
supply constraint
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utilization rate
wafer Taiwan
ASX Transcript
ASE Technology Holding Co., Ltd. (ASX) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call indicates optimism with growth in ATM revenue and gross margins, supported by strong demand and strategic acquisitions like EugenLight. The Q&A section further supports this sentiment with increased LEAP revenue guidance and strategic realignment in the EMS business towards AI opportunities. However, some caution is noted due to management's avoidance of specific long-term guidance and EMS growth timelines. Overall, the positive growth outlook and strategic initiatives suggest a positive stock price movement.
ASE Technology Holding Co., Ltd. (ASX) Q3 2025 Earnings Call Transcript
Positive12-6
The earnings call summary indicates strong growth prospects, particularly in AI and advanced packaging. The company is investing heavily in capacity expansion and R&D, which are positive indicators. Despite current margin pressures, the outlook for margin recovery is optimistic. The Q&A section reveals some concerns about management's lack of clarity on specifics, but overall sentiment remains positive due to expected growth and strategic positioning in emerging technologies. The guidance suggests a strong revenue increase, which should positively influence stock price.
ASE Technology Holding Co., Ltd. (ASX) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call highlights strong financial performance with a 12-14% revenue growth forecast, despite slight margin declines. AI-related business momentum and strategic investments in advanced packaging are promising. The Q&A reveals optimism about future growth, stable pricing, and minimal disruption from material shortages. However, uncertainties in U.S. operations and foreign exchange impacts are noted. Overall, positive revenue growth and strategic positioning in AI and advanced packaging outweigh concerns, suggesting a positive stock price movement.
ASE Technology Holding Co., Ltd. (ASX) Q2 2025 Earnings Call Transcript
Unknown7-31
The earnings call summary reveals mixed signals: positive growth in LEAP services and optimistic guidance for ATM revenue and gross margins, but negative EMS revenue and margin guidance. The Q&A session shows management's strategic focus on advanced packaging and AI testing, yet concerns about capacity constraints and lack of specific guidance persist. The neutral rating reflects these balanced factors, with no strong catalyst for significant stock movement in either direction.
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